Rental agreement in the Netherlands: Formalizing a lease contract
Renting your first office is one of the major milestones when starting a business. Or perhaps, you are looking to rent something out. Anyway, with an average commercial lease term of 5 years, your rental agreement will certainly affect your business activity. Thus, it’s worth taking the initiative to prepare the rental contract. In this post, we consider the main points and types of rental agreements in the Netherlands.
When You Need a Rental Contract
If you are looking to enter into a rental agreement for your business in the Netherlands, you need to make a deal with a counterparty and put in written mutual obligations. Assuming that one of the parties is a foreigner, a rental agreement may be prepared in English as well as Dutch.
A rental contract may also be necessary when you’ve already rented some office space and want to sublet a part of it to another company. Also, when you’re a landlord, it’s usually your initiative to draft a contract, given that a tenant enjoys a lot of protection under Dutch law.
The main point of this protection is that a landlord cannot simply put a tenant out on the street. But the time of termination comes anyway, so the types of rental contacts vary depending on this contract clause.
When it comes to shop accommodations, the regulation is more rigorous: you have a mandatory fixed period of 5 years plus a 5 year period for the first prolongation; then you get contractual freedom. With office premises, you’ve got freedom of contact from the beginning.
Types of Rental Agreements
Indefinite period
A rental contract for an indefinite period in the Netherlands is also called Model A. It often implies a 1 year period for mutual ‘getting-to-know’ and then continues for an indefinite period.
A typical figure of a landlord that is interested in concluding an indefinite rental contract is an owner of several premises or a real-estate investor. They are not supposed to use accommodations for personal purposes. This landlord is willing to have a stable rental income and is unlikely to be the first to wish for termination of the contract.
For a landlord, termination of the agreement is possible only with substantial legal reasons - like when the tenant doesn’t pay, causes nuisance to the neighbors, and so on. A tenant, in turn, can terminate the contract after the end of the initial fixed period. S/he should inform the landlord per calendar month.
The needs of your business and market situation may change over, for example, a one year period. Then, you’d probably prefer an agreement that provides more termination flexibility.
Fixed period
A temporary rental agreement in the Netherlands, also known as Model B, may run for 2 years. That is, you can limit a period to six months, ten months, twelve months, any number of months up to 24.
A type of landlord who chooses a fixed-period agreement is one who wants to be sure the tenant will leave after a certain time. They may consider using the place for own purposes or to conclude a new contract under different terms.
We mention ‘the new contract’, because it’s important: the fixed-period contract cannot be renewed or prolonged. If any prolongation happens, your Model B contact automatically transforms to Model A, and that is for an indefinite period.
Therefore, a landlord should pay particular attention to the closing of the rental agreement. A landlord has to communicate with the tenant between three and one month before the end date of the rental agreement and remind the tenant to leave. Lawyers advise doing it in written form, e.g., by registered letter, to be sure the notification is received. Otherwise, your temporary rental contract transforms to an indefinite one.
While the landlord under the fixed-period contract has to adhere to the agreed period, the tenant has the legal right to cancel the agreement anytime by notifying the landlord per calendar month.
A definite period, with a diplomatic clause
A rental contract for a definite period with a diplomatic clause, or Model C, is a temporary contract too. But the period of leasing is not that strict and ultimate.
A type of landlord that goes for a Model C rental agreement is the one who doesn’t know what they want from their commercial premises. For now, they don’t mind renting it out, but probably in few years they will use it for their own purposes again.
A tenant in this case may also have no clear plans for renting accommodation. So, the parties agree on some fixed period, for example, 1 year i.e. in a short term of planning, and then they can prolong the agreement or not by circumstances.
In case something goes wrong and it comes to a termination, they promise each other to notify the other party in advance. Both parties have the right to terminate the rental contract after the first fixed period. The tenant should notify the landlord once per calendar month. The landlord is obliged to notify the tenant at least 3 months and at most 6 months in advance.
Renewal is usually due to landlords as well as a determination just after a fixed period. At the latest, two months before the end date, the landlord has to communicate with the tenant. If the landlord does not plan to occupy the premises soon, s/he offers to extend the agreement for a certain period of time. The tenant, in turn, can give consent or cancel the rent.
Under the vacancy law
It is a rare situation, and still, you can find a nice offer for rent in the building that is ‘for sale’. Then you will be able to sign the rental agreement under the vacancy law, or Model D, and rent it until the estimated date of transfer of ownership.
The landlord who has the property for sale may be interested in profiting from the building during the purchase and sale period and giving a tenant a smaller rental fee. Under the Vacancy Act, the landlord is required to get a permit from the municipality for rent. The end date of the rental agreement cannot then exceed the term of the permit.
Both parties can initiate the termination of the rental agreement under the vacancy law. A tenant gets the right to terminate after the first 6 months - at any time by notifying the landlord per calendar month. For landlords, a longer notice period is intended - 3 calendar months after the end of the first fixed period.
Renewal is possible in principle with the extension of the municipality’s permission. However, take into consideration that the rent under the vacancy law may be only an interim solution.
What Any Rental Agreement Should Contain
When drafting a rental contract, make sure that these main points are included:
Names of the landlord and the tenant(s)
Contact details for the tenant and the landlord
Property description, including address, features, and inventory
Contract duration
Rent details (security payment deposit, payment due date, and bank details)
Landlord’s duties
Rules and terms for leasing the rental property
Clauses for terminating or extending the contract with notice periods
Dictionary of terms and jargon
A dictionary will definitely be useful when you're a foreigner in the Netherlands. If a landlord uses the Dutch rent point system to manage the rent price, you can also define it.
Additional information by type of contract:
Model A - legal reasons to terminate the contract by the landlord.
Model B - the end date and landlord’s penalties for early termination.
Model C - renewal terms and notification.
Model D - data from the Vacancy permit.
A rental contract will provide you with accommodation for your business for a clear period of time and let you use the benefits of having an offline space. Using Enty, you can create On rental agreement that is fully compliant with Dutch law. It will take a few minutes to answer questions and generate the document, - then you’re ready to go!
